How to Save Thousands of Dollars on Your Home Mortgage, 2nd Edition

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An excellent book, March 23, 2002
By
BookGuy (USA) -
This is one of the books I bought when I bought my first house. It's a fine reference source if you want to know what all the different mortgage options are (e.g., what's the difference between a fixed-rate mortgage and an adjustable-rate mortgage, what indexes are ARMs tied to, etc.). And the author--Randy Johnson--makes honest recommendations on which mortgages best suit certain typical lifestyles or income scenarios. Also, one of the books great strengths is the discussion of how many discount points to pay. The one thing I found missing, though*, was at least one real-world scenario that you're likely to see used if you visit a mortgage broker in my neck of the woods [Silicon Valley], or other high-priced regions. And that is the use of a 'first' and a 'second' mortgage in a so-called "piggyback financing" or "80-10-10 financing" arrangement which can help you eliminate Private Mortgage Insurance (PMI). There's no in-depth discussion of this technique--which is very common--which I found incredible. There's all this advice on getting an ARM tied to the CD index vs. the LIBOR index with a balloon payment if you stay in your house for 3 years instead of 10 years and so on and so forth...but nothing about getting a conforming, fixed-rate, 30-year first mortgage and a smaller second in a technique to reduce your overall payments during the lives of the loans. It's a simple technique, and very worth a detailed analysis, but I couldn't find it. Anyway, like I said, if you want to know esoteric information about mortgages, then this is a worthy book. It helped me, it's just a little shy of a full-fledged 5-star effort.
*Please Note: The review written above pertained to the 1st edition which I initially gave a 4-star rating. The second edition--which I now own also--has effectively covered "Piggyback" loans (i.e, 80-10-10 transactions), which I think propels this book into a solid 5-star work. The second edition also has updated information on shopping for a mortgage on the Internet, and some [though not all] of the examples that show different types of mortgages have had their interest rates brought more into line with present-day (i.e., 2002) rates. This is an excellent book for folks who want to know all about mortgages.


Insider's Look at the Mortgage Industry & Processes, November 17, 2002
By
Bryan E. Leed "Jesus says, 'Go and Sin No More!" (Dayton, OH USA) - This book is very easy to read and understand most of the math. It reads like you're having a friendly conversation with an industry insider who is trying hard to explain things in simple, non-technical ways, and even better, the author isn't trying to sell you something. You can't get this kind of information by talking to a real live mortgage broker, since they only want to sell you a deal.
This book has helped me to understand a lot about how the mortgage process works, and what I should look out for. If I had to find something to criticize, I would say that there is a lot of explanation over loan types that I will never use, but at least I do know more about what's out there.
Actually, for me, this book didn't steer me into doing anything different for my upcoming home purchase, but it did confirm that my original plan is the best course for someone in my situation. I will go to my credit union, make a 20%+ down payment and get a 15 year loan.
The chapter on 15 year loans is the most eye-opening thing in the book. It's amazing that even though a 30 year loan (the most common) has a lower monthly payment, after 30 years, you will have paid nearly triple the price of your house, with about 66% being interest to the bank! If that sounds extreme, just multiply your monthly payment by 360 payments, and you will see it for yourself.
The better alternative, IF you can afford slightyly higher monthly payments, is the 15 year loan, where the interest total is less than half of the total payments. Just multiply your montly payment by 180 months to see that total. Also, a 15 year loan goes for about .5% less APR.
If you can put down 20%, then you can also get out of paying the Private Mortgage Insurance (PMI), which saves you a few thousand dollars over the course of the loan.
This is a very nice book, that I could not put down. Since I am planning to purchase my first house in the near future, I found this book to be very good at explaining many technical terms that I had heard of, but I did not know what they meant. Now I know much more about mortgages, and I feel more confident about going out and buying a house. Read More....